NZD/USD trims losses near 0.6100 ahead of US CPI data


content provided with permission by FXStreet


  • NZD/USD
    rebounds
    to
    0.6090
    in
    Thursday’s
    early
    Asian
    session. 

  • The
    RBNZ
    held
    its
    policy
    rate
    at
    its
    July
    meeting
    and
    delivered
    a
    less
    hawkish
    tone. 

  • Fed’s
    Powell
    said
    central
    bank
    will
    make
    interest
    rate
    decisions
    based
    on
    data,
    not
    in
    consideration
    of
    political
    factors. 


The
NZD/USD
pair

trades
on
a
stronger
note
around
0.6090
during
the
early
Asian
session
on
Thursday.
The
pair
recovers
some
lost
ground
on
the
weaker
US
Dollar
(USD)
after
retreating
from
the
weekly
high
of
nearly
0.6155.
The
release
of
the
US
Consumer
Price
Index
(CPI)
data
for
June
will
be
in
the
spotlight
on
Thursday.

On
Wednesday,
the
Reserve
Bank
of
New
Zealand
(RBNZ)
decided
to
hold
its
Official
Cash
Rate
(OCR)
for
the
eighth
consecutive
meeting
at
5.5%,
the
highest
since
December
2008.
The
board
notes
a
risk
that
domestically
driven
inflation
could
be
more
persistent
in
the
near
term.
The
central
bank
expected
headline
inflation
to
return
to
within
the
1
to
3%
target
range
in
the
second
half
of
this
year.
A
less
hawkish
view
on
inflation
is
likely
to
exert
some
selling
pressure
on
the
Kiwi
for
the
time
being.

On
the
USD’s
front,

Federal
Reserve

(Fed)
Chair
Jerome
Powell
said
on
Wednesday
that
the
US
central
bank
would
make
interest
rate
decisions
based
on
the
data,
the
incoming
data,
the
evolving

outlook
,
and
the
balance
of
risks,
and
not
in
consideration
of
political
factors. 

Furthermore,
Powell
emphasized
that
the
Fed
will
not
be
appropriate
to
cut
the
policy
rate
until
they
gain
greater
confidence
in
inflation
heading
sustainably
towards
the
Fed’s
2%
target.
The
cautious
stance
from
the
Fed
might
lift
the
Greenback
in
the
near
term.
However,
investors
will
take
more
cues
from
the
key
US
inflation
report
later
in
the
day.
The
softer
CPI
inflation
reading
could
trigger
the
expectation
of
the
Fed
rate
cuts
this
year
and
might
weigh
on
the
US
Dollar
(USD)
against
the
NZD. 

New
Zealand
Dollar
FAQs

The
New
Zealand
Dollar
(NZD),
also
known
as
the
Kiwi,
is
a
well-known
traded
currency
among
investors.
Its
value
is
broadly
determined
by
the
health
of
the
New
Zealand
economy
and
the
country’s
central
bank
policy.
Still,
there
are
some
unique
particularities
that
also
can
make
NZD
move.
The
performance
of
the
Chinese
economy
tends
to
move
the
Kiwi
because
China
is
New
Zealand’s
biggest
trading
partner.
Bad
news
for
the
Chinese
economy
likely
means
less
New
Zealand
exports
to
the
country,
hitting
the
economy
and
thus
its
currency.
Another
factor
moving
NZD
is
dairy
prices
as
the
dairy
industry
is
New
Zealand’s
main
export.
High
dairy
prices
boost
export
income,
contributing
positively
to
the
economy
and
thus
to
the
NZD.

The
Reserve
Bank
of
New
Zealand
(RBNZ)
aims
to
achieve
and
maintain
an
inflation
rate
between
1%
and
3%
over
the
medium
term,
with
a
focus
to
keep
it
near
the
2%
mid-point.
To
this
end,
the
bank
sets
an
appropriate
level
of
interest
rates.
When
inflation
is
too
high,
the
RBNZ
will
increase
interest
rates
to
cool
the
economy,
but
the
move
will
also
make
bond
yields
higher,
increasing
investors’
appeal
to
invest
in
the
country
and
thus
boosting
NZD.
On
the
contrary,
lower
interest
rates
tend
to
weaken
NZD.
The
so-called
rate
differential,
or
how
rates
in
New
Zealand
are
or
are
expected
to
be
compared
to
the
ones
set
by
the
US
Federal
Reserve,
can
also
play
a
key
role
in
moving
the
NZD/USD
pair.

Macroeconomic
data
releases
in
New
Zealand
are
key
to
assess
the
state
of
the
economy
and
can
impact
the
New
Zealand
Dollar’s
(NZD)
valuation.
A
strong
economy,
based
on
high
economic
growth,
low
unemployment
and
high
confidence
is
good
for
NZD.
High
economic
growth
attracts
foreign
investment
and
may
encourage
the
Reserve
Bank
of
New
Zealand
to
increase
interest
rates,
if
this
economic
strength
comes
together
with
elevated
inflation.
Conversely,
if
economic
data
is
weak,
NZD
is
likely
to
depreciate.

The
New
Zealand
Dollar
(NZD)
tends
to
strengthen
during
risk-on
periods,
or
when
investors
perceive
that
broader
market
risks
are
low
and
are
optimistic
about
growth.
This
tends
to
lead
to
a
more
favorable
outlook
for
commodities
and
so-called
‘commodity
currencies’
such
as
the
Kiwi.
Conversely,
NZD
tends
to
weaken
at
times
of
market
turbulence
or
economic
uncertainty
as
investors
tend
to
sell
higher-risk
assets
and
flee
to
the
more-stable
safe
havens.